Whatever the Tories decide on inheritance tax, there are many simple ways to
reduce your liability. Here are 10 of the best.

You don't need to wait for the Conservatives to decide what their policy on inheritance tax (IHT) is to cut your liability to pay this posthumous tax. There are so many ways to avoid IHT that accountants sometimes call it the "voluntary tax". Here are 10 action points to consider now.

1. MAKE A WILL

This is the first step toward avoiding IHT. George Bull, a partner at the accountants Baker Tilly, said: "If you die intestate you will have no control over how your assets are distributed and you may end up paying IHT unnecessarily. For example, you may have intended to leave everything to your spouse but, in the event of intestacy, other relatives may be entitled to a share and IHT would have to be paid."

2. BE GENEROUS SOONER RATHER THAN LATER

All gifts made more than seven years before the donor dies are free of IHT. However, if you reserve any benefit from a gift – such as continuing to live in a house you have given away – then HM Revenue & Customs (HMRC) may apply "gift with reservation" rules to apply tax as if the transfer had never happened.

Donors don't need to survive seven years for some gifts to become IHT-free. John Whiting of accountants PricewaterhouseCoopers said: "If you cannot afford to give big money away, it makes sense to use the smaller allowances such as the £3,000 per person annual allowance for gifts to anybody and the ability to for parents to give up to £5,000 to their children when they marry – and that could be £5,000 from each parent to each adult child."

4.KEEP IT IN THE FAMILY

Discretionary trusts can be set up for about £500 and enable assets up to the nil rate band of IHT of £312,000 per person or £624,000 married couple or civil partnership to be sheltered from IHT, so long as the donor survives seven years. Unlike outright gifts, these trusts let donors retain control of the assets.

Mike Warburton, senior tax partner at accountants Grant Thornton, explained: "There will typically be two trustees to control the trust and these will usually be the parents. Discretionary trusts can be a useful way to avoid , while also preventing the adult children recipients from buying a Ferrari for example."

5.MAKE REGULAR GIFTS FROM INCOME

People with substantial income who make a habit of distributing some of it can dramatically cut their tax bills. Mr Warburton said: "For these gifts to be IHT-free, they must satisfy three key tests: they must be made out of income – as opposed to selling assets to fund them; they must be regular – or at least the intention must be for them to be regular; and they must not reduce the donor's standard of living."

6.BECOME A GENTLEMAN FARMER

Complex rules govern business property and agricultural land reliefs, so professional advice should be taken – not least about the risk of losing your capital while trying to avoid tax. But, in general, agricultural land which is let out can become IHT-free after seven years and could be IHT-free after two years if you play a part in farming it.

7.DO MENTION THE WAR

Where injuries suffered during military service are a contributory factor in anybody's death, then that person's estate may become IHT-free. Mr Warburton said: "Not many people know about this exemption but it enabled a Duke of Westminster to avoid IHT when he died many years after injuries sustained during the Second World War and it may now be relevant to more people, following our military intervention in Iraq and Afghanistan."

8.UNLOCK WEALTH TIED UP IN BRICKS AND MORTAR

Now that it is impossible to shelter the family home from IHT and remain living in it, another solution is to spend some of the wealth in that asset before it can be taken into account for tax. Equity release schemes marketed by members of the Safe Home Income Plans (Ship) trade body promise borrowers they will never be in negative equity.

9.BEWARE THE PITFALLS OF PEPS AND ISAS

Individual Savings Accounts (Isas), which replaced Personal Equity Plans (Peps), are popular ways of avoiding tax on income and gains from a wide variety of savings and investments – but they confer no protection against IHT.

10.LEAVE THE COUNTRY

Changing your domicile – the country which you regard as home – is more difficult than changing the country in which you are deemed to be resident for tax purposes. Mr Whiting said: "One definition of domicile is the country in which you intend to be buried. If you are domiciled overseas, then only assets based in Britain will be subject to IHT, whereas IHT would cover your worldwide assets if you were domiciled here."

Telegraph Inheritance Tax Services

Telegraph Inheritance Tax Services, provided by Skipton Financial Services Limited, can offer you a no-obligation, comprehensive estate and tax planning advice. If you have any concerns about your potential IHT liability or any recent changes to the law, please call 0800 389 8395 or visit www.telegraph.co.uk/iht.